Current Real Estate Market Trends

The housing market saw a 1.3% increase in closed sales of previously owned homes in July, breaking a streak of five months of decline. Despite this slight improvement, sales were still 2.5% lower compared to the same time last year. The Northeast experienced the largest gains in sales, while the Midwest remained flat. Additionally, home prices rose the most in the Northeast.

Lawrence Yun, the chief economist at the National Association of Realtors, acknowledged the sluggish nature of the current market. He attributed the growth in sales to an increase in consumer choices and improved affordability due to lower interest rates. These sales are based on contracts signed during May and June, when mortgage rates were much higher at around 7%. However, rates began to decline in July, hovering around 6.5%.

Interestingly, all-cash offers accounted for 27% of July sales, marking an increase from the previous year and significantly above historical averages. The inventory of homes for sale also increased in July, with 1.33 million homes on the market, representing an 0.8% increase from June and a 19.8% increase from July 2023. Despite the rise in supply, home prices continued to climb. The median price of an existing home in July was $442,600, a 4.2% increase from the previous year.

First-time buyers represented 29% of sales in July, remaining unchanged from June but down from 30% in July 2023. Typically, first-time buyers make up around 40% of home sales, but rising home prices and mortgage rates have hindered affordability. With rates now slightly lower, there is a slight uptick in demand from this segment.

While there are some positive indicators in the current real estate market, such as increased sales and lower interest rates, challenges remain. Affordability continues to be a concern for first-time buyers, and the rise in home prices despite an increase in supply poses a dilemma for potential buyers. As the market continues to evolve, it will be interesting to see how these trends shape the future of the real estate industry.